Yahoo plans to cut 15% of workforce and close several business units

Yahoo chief executive officer Marissa Mayer is expected to unveil a cost-cutting plan, which includes closing down several business units and slashing the company's workforce by up to 15%. The plan is expected to be announced after Yahoo's fourth-quarter results on Tuesday (2 February).

Yahoo's revenue for the fourth quarter is expected to rise to $1.19bn (£827m), up less than 1% from a year ago. Mayer is expected to focus on Project Index, a programme to build a search engine designed for mobile phones.

Sources familiar with the plan told the Wall Street Journal that Yahoo axed at least five managers who were working with Brightroll. The latest disclosure follows reports suggesting that the company CEO fired 30 employees by accident.

Activist investors have pressured Yahoo to sell its core internet business and set up a new management, even threatening to nominate directors by 26 March. In October 2015, Mayer hinted that the company would adopt a new strategy to reset focus on a fewer areas, without providing further details.

She said, "We see a unique moment and opportunity for Yahoo, as we move into 2016, to narrow our focus on fewer products with higher quality. We need to work to improve our relevance to end users and how many times they come to us."

Potential buyers

The company has been planning to spin-off its shares in Alibaba Group and said it would consider the sale of its core internet business. While a number of potential buyers expressed interest in Yahoo, the company has not held serious talks with any of them so far, according to the WSJ report.

Among them, Verizon has publicly expressed interest to buy the company. Verizon could combine Yahoo's online advertising and media assets with AOL, which it purchased in 2015 for $4.4bn.

Rising expenses

Yahoo's expenses have risen, while its revenue has fallen since Mayer joined the company. In 2015, for the first nine months expenses were estimated to be $3.9bn, a 20% increase when compared to the same period a year ago. During the same time the revenue paid to its search partners dropped 4%, to $3.09bn. Expenses shot up even more as the internet giant struck a deal with Mozilla and Oracle to provide traffic for its search engine.

Mayer has cut down staff in recent quarters to 10,700 from 14,000 in 2012. A total of 1,800 employees were axed in the first nine months in 2015 from offices in China, India and Canada. In an attempt to cut costs, the company is shutting down operations in Mexico and Argentina, which would affect less than 50 employees.